Leveraging Posterity’s Prosperity?

Author:

Brumm Johannes1,Kotlikoff Laurence2,Kubler Felix3

Affiliation:

1. Department of Economics and Management, Karlsruhe Institute of Technology (email: )

2. Department of Economics, Boston University (email: )

3. Department of Banking and Finance, University of Zurich (email: )

Abstract

We critically review studies by Blanchard (B) and Rachel and Summers (RS). By the standard fiscal-gap measure, the US government is in dire fiscal shape thanks to constantly enlarging its postwar, take-as-you-go Ponzi scheme. Yet B and RS seemingly rationalize its expansion. Their arguments rest on the safe rate being very low. But almost all households face high safe rates--the rates available from pre-paying their loans. We also question modeling assumptions that help drive key B and RS results and reference recent simulation studies, which reach strongly opposite conclusions to B's.

Publisher

American Economic Association

Cited by 2 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. A balance‐sheet approach to fiscal sustainability;Fiscal Studies;2023-03

2. Are deficits free?;Journal of Public Economics;2022-04

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